The yen regained its footing in late trading as equity markets gave back earlier gains. Caution remains in the air with the outlook for growth dimming and the troubles in Europe. A week of major event risk is ahead which could lead to wild fluctuations in risk sentiment and the yen as well. The Asian currency has seen its correlation with risk grow as traders have started to favor the yen over the dollar as a funding source for riskier investments.

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 A week of rate decisions, quarterly GDP reports, US employment figures and a number of other significant releases offers the potential for a great deal of volatility. The two central banks that have the greatest potential for altering monetary policy will convene this week in the RBA and BoE which could initiate new trends in their crosses and should garner the focus of markets. Employment and manufacturing data from the world’s largest economy 

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 Just 24 hours ago, crude was pitched into its sharpest decline in three weeks; and the bullish trend the commodity had carved for most of the month seemed over. However, in a sign that recent high levels of volatility do not have an outlet in the form of a clear trend; the commodity would reverse most of its losses through Friday and position the market back within a broad range between $80 and $77.50.

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Mortgage approvals in the U.K. are expected to fall to 50.0K in January following the unexpected decline in the previous month, and the data could weigh on the exchange rate as policy makers continue to see a risk for a protracted recovery.

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The fundamental storm underlying the financial markets is building, yet the anchor on sentiment is holding fast. While this divergence between the primary health of the markets and the prevailing asset levels is remarkable, it is not altogether unusual.

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Extreme weakness in the pound has catapulted EUR/GBP higher. After weeks of moving sideways below the 200 SMA, EUR/GBP has closed above that very much watched moving average. I would not chase it here but look for some kind of retest of the .8873 breakout area. Though Stochastics has crossed over into overbought territory, EUR/GBP could continue to move a several hundred pips while this indicator is in this area. The inability of the EUR/GBP to get and stay below the key .8700 level bodes will for a bullish trade. 

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SP 500 Futures: Strong rally off the lows yesterday, and the volume into the close was strong to the upside. Still the weakness in the background that we outlined Wednesday, so it has to get through this 1105 to 1115 resistance zone to really avoid weak…
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About two weeks ago, I unfortunately had to attend a funeral for my wife#8217;s uncle. He was really a great person#8212;fun, intelligent, and a man with real integrity and deep religious conviction. I admired him greatly. My father-in-law gold ……
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Equities: Strong Asian economic data, emanating from Japan and Korea, mixed with supportive spending/deficit priorities from India to set a positive tone for the European session. Earnings flow was mixed, but taking support from Asia, and bouncing of yest…
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EUR/USD Today#8217;s support: - 1.3532, 1.3500 and 1.3472(main), where correction is possible. Break would give 1.3457, where correction also may be. Then follows 1.3429. Break of the latter would result in 1.3407. If a strong impulse, we would ……
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